Moreover, there are 450 operatives working 75 shifts, who get paid a salary of £13,550 per annum, plus a £540 bonus, plus a 10% shift allowance. The bonus is paid at 5% for disposing of the waste plus 3% for meeting core standards. Staffs working longer or late hours do not seem to have any extra pay. The bonus is based on objectives, which consist of corporate and personal objectives, which are defined by the company working with the employees, and the hours worked do not seem to matter unless they meet the target objectives. The hours worked over and above contractual agreement are irrelevant unless the outcomes are met. Therefore, it can be assumed that the productivity levels are not as high as expected. According to Armstrong (2002, p.46) “a psychological contract is a system of beliefs which encompasses the action employees believe are expected of them and what response they expect in return from their employer.” Relating to this definition, it seems that the employer (Refusenicks PLC) should have provided some extra incentives for the staffs to motivate them to contribute efficiently to the tasks set.
In addition, another problem is the pensions and holidays scheme. Refusenicks PLC, need to address the pension and holiday scheme, as at the moment they only offer a final salary pension and 24 days holiday including 11 extra bank holidays. The employees are not given any other form of incentives. Rewards are tied in with productivity. Although, reward incentives are short term based the chance of increasing productivity is higher if rewards are reasonable. Not only does reward incentives create productivity it also creates a positive working environment and brings changes in behaviour of employees. Therefore, the organisation needs to build in some forms of incentive programs within the compensation benefit scheme.
Following on another problem which could possibly affect the working performance is the difference in salaries. For example the work managers salaries differ depending on start dates and years worked for the organisation. The salary starts from £20,295 - £21,654, including unsocial hours allowance of £1,200 per annum. Despite the fact that managers are carrying out same job role and position, it can be assumed that starting members get lower pay, and experience from previous job does not count. This could possibly lead to de-motivation and lack of performance. Therefore, this should be taken into consideration as by increasing salary for those who have worked longer for the company may be getting paid for their loyalty, but may not be performing as well as those who started later. Recognition should be given to all depending on performance, rather than the amount of years worked.
There also seems to be a gap between upper and lower management, pay should reflect performance. Fernie & Metcalf cited in (Lazear, 1996, p.1346) “when payment is contingent on performance, employees perform well than when payment is unrelated to performance.” Therefore recognition should be given to those who are performing well. However, “The development and design of performance management system naturally depends heavily on how performance is defined and on the state and nature of the organisation’s existing system and structure. This is a very problematic concept, as forging a link between individual and organisational performance is far from simple.” (Williams, 1998, P.190).
There is also a concern in employee progression, there is no evidence to say that Refusenick PLC provide training for the staff, by enabling training facilities organisations again are able to create productivity and work capital, as not only do the employees benefit by enhancing skills and knowledge. The organisation also benefit, which is known to be a win-win situation. Therefore training should be taken into consideration.
Recommendations
As cited in Armstrong (2002, p 4) “a reward system consists of financial rewards (fixed and variable pay) and employee benefits which together comprise of total remuneration.” It is moreover made up of non-financial rewards such as recognition, praise and personal growth. In general cases performance management processes are included. The combination of each and every one of them encompasses the total reward system.
Recommendation for monetary remuneration may well be performance related pay. “Performance related pay (PRP) offers individuals financial rewards in form of increment to basic pay or cash bonuses, which are related to an evaluation of performance, generally in relation to approved objectives.” (Armstrong 2002). The advantages of PRP to the employer are that rewards are given only for good performance. It is reasonable to employees as they will be aware of the fact that they will be remunerated for their effort if they meet the strategic objectives. The advantages of PRP to the employees is that it motivates them to work harder, giving them an opportunity to boost basic earning as well as increase commitment and loyalty to the organisation. However the disadvantages of PRP for employers are that it is complex, highly-priced, it is not flexible and focuses only on target rather than the whole job position or role. In regards to the employees’ side, PRP is criticised as it lacks simplicity and small rewards do not always motivate.
A further potential pay system is Competence-based pay (CBP). CBP sometimes referred to as skills-based pay which is another form of reward system. “CBP can be defined as a technique of gratifying individuals for the variety, intensity and types of skills and knowledge that they are proficient in using for the job.” (Marchington, 2005). The advantage of CBP is that it encourages staff to enhance skills. It rewards input moderately than output of performance, i.e. specific skills/ qualities, problem solving, decision making, leadership, achieving qualifications. However the complexity linked with CBP is that it is hard to calculate fairly and expenditures could possibly rise.
To make Refusenick PLC staff work more effectively motivation and productivity need to be increased within the organisation. Few changes in the performance and reward system need to be made.
“The main purpose of performance management is to improve the performance of all employees across the whole organisation; employee development therefore is a key issue. To increase performance it is necessary for the organisation to have a set of effective development programmes that are accessible to everyone.” (Currie, 2006, P.162)
It is vital for the organisation to understand their employees in order to succeed as it is there behaviour and optimism within job roles which enables the business to work towards success. There are a number of theories which Refusenick PLC can consider and apply in order to make sure performance and reward systems are good enough to adapt to employees to their job roles in a much more appropriate manner.
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Hackman and Oldham (1976, 1980) Job characteristic model - may prove useful as by following the theory they could obtain individual results on how each individual differs and how employees respond to nature of design of their work. Through surveys they could allocate people to the roles which best suit them.
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Maslow’s hierarchy of needs: Maslow classified five human needs which are based on progress of an individual, what goals they have and what importance it holds. Again through questionnaires and other forms of communication with staff they could obtain vital research on their employees in order to improve reward systems through understanding their behaviour and interests.
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ERG theory: Alderfer (1972) proposed three categories which are similar to Maslow’s classification. After obtaining results on employees interests and behaviour at work, if they were to add both extrinsic rewards as well as intrinsic motivations depending on what best suits the employees at work, they could make the environment at work a lot more positive by ensuring staff safety and security within the job roles allocated as well as make them feel wanted, part of the organisation through participation in tasks as well as giving recognition for work (praise when achieved goals).
(Williams, 1998, P.190/ 200)
“The way employees feel about their job and their workplace determines how motivated they are. There is a clear link between job satisfaction and productivity.” (Business link, 2008). Therefore it would be ideal for Refusenick PLC to get feedback from their staff in person or via staff surveys. This is a good method in which they will be able to obtain information on how employees feel about their job roles, the support they have and need, they could also get suggestions on how to improve the business. By carrying out this method not only would Refusenick PLC be getting feedback but also staff involvement in the business, which helps motivate staff as they feel a part of the organisation through participation in further enhancements. Recognition of staff contribution through regular appraisals and positive feedback also help reduce distance between all workers and communication levels rise which helps build a friendly working environment for all.
Another way in which they could make the workplace more successful is through trade union recognition, as through partnership between employer and employees they can overcome problem through clear understanding and constructive communication. By involving everyone from employers to employees they can increase work capital, and productivity. Both parties should be reasonable and understand one another’s needs in order to get the most out of their inputs. Negotiating plays a key role, however if problems can be resolved between both parties, they should be able to find solutions to arguments or uncertainties raised. (Employee relations forum, 2010)
Job satisfaction depends partially on tangible rewards; and the culture of the organisation plays a key significance as well. Tangible rewards such as certificates and awards can be given to show recognition of outstanding work and progression, however instead of just focusing on one person if they were to focus on awarding people on group and team work would be much ideal, as by doing so there is chance of more communication between the staff, and it also enables staff to learn much more when working as a group or team. Individuals come from different backgrounds, different personnel and profession work experience, therefore after completing projects, meeting targets etc, the employees are bound to feel a sense of accomplishment which should increase motivation as well as create a more sociable, comforting environment.
A supplementary reward incentive that could be introduced by Refusenick PLC is gain sharing. ‘GainSharing’ is a method which make available to employees, share in the financial gains made by a business as a consequence of its enhanced performance. It is also designed to improve productivity through employee involvement, with the gains shared amongst employer and employees
“Pension is another form of reward that can be taken into consideration. Pension can be seen as a form of delayed pay.” (Marchington, 2005.p360) according to Tyson (2006, p 311) “pensions are an essential feature of the reward package, in regards to being an employer of choice, and because pension costs can amount to as much as 20 percent of the annual payroll.” Refusenick PLC however, should consider switching from final salary pension and offer Money purchase pension instead as this will mean the company will face fewer risks in the longer run.
Non financial incentives that might be introduced by Refusenick PLC can be training and development. Training staff improves performances, therefore if Refusenicks PLC added some training facilities within the organisation they could benefit a lot as by doing so staff skills would improve and develop, which would increase the working standards with hopes of promotions. Other benefits that could be envisaged are company cars, private health insurance or even travelling opportunities.
Conclusion
To conclude this report, the suggestions made look very encouraging and promising to both employer and employees. There are more incentives recommended to increase productivity and work capital. There should not be many conflicts or obstacles in relations to the changes made as it is linked to the corporate strategy of the business in which the workforce is treated well and there are no disruptions to services, as all are benefiting from the changes which are optional for improvement in the nearer future.
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